Correlation Between Victory Incore and State Farm

Can any of the company-specific risk be diversified away by investing in both Victory Incore and State Farm at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Victory Incore and State Farm into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Victory Incore Investment and State Farm Interim, you can compare the effects of market volatilities on Victory Incore and State Farm and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Victory Incore with a short position of State Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victory Incore and State Farm.

Diversification Opportunities for Victory Incore and State Farm

-0.07

Correlation Coefficient

Victory Incore  State Farm

Good diversification

The 3 months correlation between Victory and State is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Victory Incore Investment and State Farm Interim in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Farm Interim and Victory Incore is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Victory Incore Investment are associated (or correlated) with State Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Farm Interim has no effect on the direction of Victory Incore i.e., Victory Incore and State Farm go up and down completely randomly.

Pair Corralation between Victory Incore and State Farm

Assuming the 90 days horizon Victory Incore Investment is expected to under-perform the State Farm. In addition to that, Victory Incore is 4.48 times more volatile than State Farm Interim. It trades about -0.23 of its total potential returns per unit of risk. State Farm Interim is currently generating about -0.26 per unit of volatility. If you would invest  961.00  in State Farm Interim on October 9, 2024 and sell it today you would lose (5.00) from holding State Farm Interim or give up 0.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Victory Incore Investment  vs.  State Farm Interim

Victory Incore Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Victory Incore Investment has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Victory Incore is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

State Farm Interim

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days State Farm Interim has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, State Farm is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Victory Incore and State Farm

The main advantage of trading using opposite Victory Incore and State Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Victory Incore position performs unexpectedly, State Farm can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in State Farm will offset losses from the drop in State Farm's long position.

The idea behind Victory Incore Investment and State Farm Interim pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.